Minerva to reduce debt by listing Chilean subsidiary
Dec, 03, 2018 Posted by datamarnewsWeek 201849
Brazilian meat packer Minerva SA, which is planning to list its Chilean subsidiary, Athena Foods, for an IPO next year, said it will consider further acquisitions in South America once this process is complete. The proceeds from the IPO are expected to reach R$1.5bn, which will help reduce the company’s R$7.2bn debt. The US is likely to lift a ban on Argentine beef where Minerva also owns five plants. Argentina is forecast to export 500,000 tons of beef next year, up 15% YoY.
Supporting Sources:
UPDATE 2-Brazil’s Minerva Chile unit IPO could pave the way for deals
3 Min Read
(Adds details regarding strategy to deal with Russian meat export ban, plan to float 35 percent of Athena)
By Ana Mano
SAO PAULO, Nov 26 (Reuters) – Brazilian meatpacker Minerva SA, which plans to list shares of a Chilean subsidiary next year, will consider acquisitions elsewhere in South America once the transaction is complete, executives said on Monday.
The listing of Athena Foods, which accounts for about 40 percent of Minerva’s gross sales, will allow the group to keep diversifying its export base in South America, where production costs are lower than in markets such as the United States, the executives said during a company presentation.
Exporting from multiple countries also helps circumvent trade bans and expand sales in markets like China and Europe, they said.
“Asia is the growth area for the whole of the Minerva group … There is an insatiable appetite to import beef from South America,” said Iain Mars, Athena Foods’ chief executive, who recently attended a trade fair in China.
Mars noted that when Russia banned Brazilian meat exports in December 2017 over the alleged use of forbidden feed additive ractopamine, Minerva’s exporting plants in Colombia and Paraguay filled the gap. To capture even more opportunities, he said the company may grow through acquisitions in Colombia and in Argentina, without elaborating.
Minerva first announced the Athena IPO plan in August, saying the Santiago-listed unit would comprise its operations in Chile, Paraguay, Uruguay, Colombia and Argentina.
The proceeds from the IPO, as much as 1.5 billion reais ($386 million), will help reduce its 7.2 billion reais in net debt, the equivalent of five times earnings before interest, taxes, depreciation and amortization (EBITDA).
A 1 billion real private placement will also contribute to debt-cutting efforts.
Minerva, which plans to float 35 percent of Athena, owns five plants in Argentina, but only one is operating, management said.
Mars cited “a strong rumor” that the United States would lift a ban on Argentine meat imports during this week’s meeting of the G20 industrialized nations.
Reuters reported earlier on Monday that the U.S. and Argentina were on the verge of signing a deal that would allow two-way trade of fresh beef for the first time in nearly two decades.
If the U.S. authorizes imports of beef from Argentina, the company may reopen a second plant there, Minerva Chief Executive Fernando Queiroz said on the sidelines of the event.
There is potential to increase Argentina’s beef exports worldwide by 15 percent year-on-year, to 500,000 tonnes, Queiroz said, citing the U.S. Department of Agriculture’s projections for 2019. ($1 = 3.8878 reais)
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